Smart Grids Roadmap - Smart Grid Sherpa

Even as transmission systems are being smartened,new transmission capacity and interconnectionswith other electricity systems are also needed.Deploying new transmission is often complicated bythe unbundled and liberalised nature of electricitysystems and by lengthy approval processes.Some countries now investing in nationalscaletransmission systems (e.g. China), are notexperiencing these issues and have been able todeploy modern transmission systems very quickly,defining smart grids as “strong and smart grids”and making use of modern HVDC technologies.Other countries could benefit from greaterregional assessment of the current status andfuture requirements of transmission systems, toidentify technology applications and requirementsfor additional capacity and interconnection.Such assessments can lead to new technical andregulatory solutions that optimise the operationand planning of existing systems, enabling thedeferment of conventional investments that maybe hindered by long approval processes or localopposition. To enable efficient operation today aswell as accommodate future changes, governmentand regulatory policies must allow timely andadequate transmission system investment;inadequate investment brings risks of higher costsin the future and of system failures.Distribution networksThe smartening of distribution networks canbring significant benefits to operators andcustomers, but requires considerably moreeffort than smartening transmission networks.Distribution networks have many more nodes to beinstrumented and managed, and ICT requirementsare much higher. Distribution systems connect tonearly all electricity customers (excluding largeindustrial customers connected to the transmissionsystem), as well as distributed generation, variable/dispatchable resources and new loads such aselectric vehicles. Smart grid technology must bestrategically deployed in order to manage thiscomplexity, as well as the associated costs, to thebenefit of all stakeholders.increased interaction between DSO and customerthrough the provision of real-time energy usageinformation and pricing, which are importantnew tools for both DSOs and retailers. Experiencegained through pilots and demonstrations canbe applied to develop new business and marketmodels for DSO/retailer-customer engagement.The most important aspect in the development ofneeded regulatory, business and market modelsis that benefits and risks associated with thedeployment of smart grids must be shared withother stakeholders – upstream with other systemoperators and generators as well as downstreamwith end-users. Business models without sharedcosts and benefits will not be successful. Additionalpolicy and regulation will be needed for DSOs tomanage and utilise these relationships to meetsystem investment needs.Smart grid, smartconsumer policiesElectricity is consumed by a range of customers,including industrial, service/commercial andresidential. In industrial and sometimes thecommercial sectors, customer knowledge ofenergy management is high and technologies toenable demand response or energy efficiency arewell known, mature and driven by cost savings.However, this is not the case at the residential level,where there is a need to rapidly expand businessmodels, analysis and communication to enablemuch greater residential customer interaction withthe smart grid.Compared with customers in other industries, suchas telecommunications, travel and retail, electricityconsumers are typically not provided with eitherthe service options or pricing information needed tomanage their consumption. Providing these optionsand information can help costumers becomesmarter while delivering significant benefits to gridoperators, including reduced costs. Smart gridcustomer policies fall into three groups: consumerfeedback, pricing and customer protection.Market unbundling has changed the ownershipand operating arrangements of distributionnetworks and, in many countries, the role ofthe distribution system operator (DSO). Insome countries, an electricity retailer or energyservice provider entity is placed between thecustomer and the DSO. Smart grids enable36 Technology Roadmaps Smart grids© OECD/IEA, 2010